The European Securities and Markets Authority has called for stronger crypto-asset regulation to address persistent risks to market integrity and retail investors, according to a Law360 report.

ESMA, the Paris-based EU agency that coordinates securities supervision across the bloc's 27 member states, has become one of the most active regulatory voices on digital-asset policy in Europe. Its renewed push for tighter oversight signals that existing frameworks are not yet fully addressing the scale and complexity of crypto-market activity as the asset class continues to attract institutional capital and retail participation.

The call comes as the bloc continues to operationalize the Markets in Crypto-Assets regulation, known as MiCA, the EU's first dedicated horizontal framework for crypto issuers and service providers. MiCA introduced authorization, governance, disclosure and operational requirements for stablecoin issuers, asset-referenced token providers and crypto-asset service providers operating in the bloc. National regulators across the EU are processing authorization applications under the new regime, while ESMA coordinates supervisory convergence and develops binding technical standards.

What risks is ESMA highlighting?

ESMA has repeatedly flagged several categories of risk in its crypto-market assessments. These include:

• Retail-investor exposure to volatile and complex products
• Rapid entry of non-EU firms through MiCA's reverse-solicitation provisions
• Market-integrity concerns around crypto-asset trading venues
• Governance or capital weaknesses at smaller service providers

The agency's renewed call suggests it sees unresolved gaps in how these risks are being managed under the existing rulebook.

The reverse-solicitation provision has been a particular focus of supervisory attention. It allows firms to provide services to EU clients without an EU presence, provided the service is initiated by the client. Industry participants have raised concerns that the provision is being used as a workaround, while ESMA and national authorities have signalled they are monitoring the boundary closely.

What tools does ESMA have to act?

ESMA does not directly supervise individual firms. Its role under MiCA and the broader EU financial-services framework is to coordinate national regulators, issue binding technical standards, and publish opinions and guidance. The agency can also flag concerns to the European Commission, which holds primary legislative initiative in the EU. ESMA's call for stronger rules may therefore signal a push for additional EU-level legislation, tighter technical standards, or stronger supervisory convergence among national authorities.

Under MiCA, ESMA has been granted an enhanced coordinating mandate. The agency is responsible for technical standards covering market manipulation, insider lists, and cost disclosures, and it maintains registers of asset-referenced token and e-money token issuers that have been authorized under the new framework.

What comes next?

ESMA's recommendations typically feed into Commission policy reviews and the work of the European Parliament and Council. The Commission's ongoing assessment of MiCA implementation is likely to be a venue where ESMA's concerns are addressed, with potential adjustments to technical standards, supervisory coordination, or the regulation's scope expected to emerge over the coming legislative cycle. Crypto-market participants should expect ESMA to publish additional guidance and supervisory statements in the months ahead as the agency works to close the gaps it has identified.